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CESR review identifies improvements in financial information throughout Europe in 2009
September 23, 2010--CESR publishes today its first annual activity report on monitoring enforcement of International Financial Reporting Standards (IFRS) in Europe (Ref. CESR/10-917). The report shows both an increase in regulators’ enforcement activities and greater consistency regarding the actions taken by enforcers.
As part of the 2009 IFRS enforcement activities, EU enforcers also identified an overall improvement in the quality of reporting under IFRS, since its adoption in Europe. Nevertheless, the report also presents those areas identified by enforcers on which listed companies are urged to focus further, in order to ensure improvements in the information provided to investors.
Recognising the global nature of financial markets and the need to maintain investor’s confidence globally, the report also outlines the steps taken by CESR in 2009 to engage with third country enforcers of financial information. This dialogue seeks to encourage further harmonisation of enforcement practices in IFRS reporting by listed companies worldwide.
view the Activity Report On IFRS enforcement 2009
Parliament gives green light to new financial supervision architecture
September 22, 2010--Having fought for more than a year in favour of a radical reform of European financial supervision, the European Parliament on Wednesday gave the final seal of approval to a package of reforms which will see a fundamental shift in the way banks, stock markets and insurance companies are policed as of 2011.
Three European supervisory authorities (ESAs) will be established to replace the current supervisory committees. Their powers will stretch much further than the advisory nature of the current system and their potential to gain further competences will be considerable thanks to a strong review clause. A European Systemic Risk Board (ESRB) will also be established with the task of monitoring and warning about the general build-up of risk in the EU economy.
This new system should be able to provide better protection from events such as the Fortis bank crisis weekend, Germany's unilateral naked short-selling ban and the losses faced by life insurance policyholders in the UK, Ireland and Germany with the collapse of Equitable Life. It should at the same time strengthen the EU single market for financial services and provide much better investor protection.
Cosmetic or root and branch reform
A number of Member States, particularly those with large financial centres, favoured the limited reform approach. This led to a significant reduction in the scope of the Commission proposals, themselves considered by the EP as not going far enough. Parliament's rapporteurs from the beginning argued that the system needed serious reform so that risk would be better understood, primarily through much improved communication between national supervisors.
The final deal sees the transformation of advisory committees into watchdogs with a bite. The ESAs are set to get tough new powers to settle disputes among national financial supervisors and to impose temporary bans on risky financial products and activities. If national supervisors fail to act, then the authorities may also impose decisions directly on financial institutions, such as banks, so as to remedy breaches of EU law. The daily work of the ESAs will see them drive coordination within the current system of colleges of national supervisors set up to watch over cross-border financial institutions.
ESA firefighting powers
In the event of disagreements between national supervisors, ESAs will be able to impose legally-binding mediation and, if no agreement can be reached within the relevant college of supervisors, to impose supervisory decisions on the financial institution concerned ESAs will be able to intervene as mediators at their own discretion, rather than only at the request of one of the national supervisors.
budget: MEPs want more flexibility and policy debate
September 22, 2010--Parliament wants more flexibility within the EU budget to meet current and future needs. In a resolution passed on Wednesday, it urges the Council to enter into policy negotiations on its budget proposal for 2007-2013. The current (March 2010) proposal is deemed too rigid to provide sufficient funding to meet new challenges, including those arising out of the Lisbon Treaty.
The Multiannual Financial Framework (MFF) sets annual ceilings for commitments and payments by category of expenditure. It had to be revised to bring it into line with the Lisbon Treaty, but a draft interim report by Reimer Böge (EPP, DE), approved today, criticises the Council proposal as "purely technical", and "insufficient for Parliament to give its consent."
"The Council proposal does not add the resources necessary to deliver initiatives that were not foreseen when the current MFF was adopted in 2006. The most obvious ones are the new priorities included in the Lisbon Treaty, like the external action service, climate change, energy, civil protection, sports and space. But even before the addition of these new priorities, the annual budgets could only be agreed by exhausting the existing margins", said Mr Böge, adding that "for the coming years, the remaining margins under the ceilings of the framework are estimated to be negligible."
To meet current and future needs, Parliament would like to see wider margins and reserves built into the framework. This means more flexibility to make changes within and between budget headings.
Parliament also calls on the Council and the Commission to consider rejigging the budget by establishing "positive" and "negative" priorities, bearing in mind the EU's added value. Commission and Council should finally come up with the long-awaited mid-term review (due in 2009), of all the aspects of EU spending and resources, so that a real policy debate can be held on future priorities.
The Böge report was approved with 445 votes in favour, 39 against and 18 abstentions.
ETF Landscape: European STOXX 600 Sector ETF Net Flows, week ending week ending 17-Sep-10
September 22, 2010--Last week saw US$118.4 Mn net outflows from STOXX Europe 600 sector ETFs. The largest sector ETF net outflows last week were in Food & Beverage with US$74.6 Mn and Insurance with US$43.7 Mn while Banks experienced net inflows of US$54.4 Mn.
Year-to-date, STOXX Europe 600 sector ETFs have seen US$34.1 Mn net inflows. Banks sector ETFs have seen the largest net inflows with US$228.5 Mn, followed by Media with US$203.2 Mn while Food & Beverage has experienced the largest net outflows of US$148.3 Mn YTD.
The US$9.0 Bn AUM invested in the ETFs is greater than the US$3.3 Bn open interest in the sector futures. The ETF AUM is greater than the open interest in the corresponding futures contract in all 19 sectors.
First ETF at WSE
September 22, 2010--The first Exchange Traded Fund - Lyxor ETF WIG20 – has started trading at the Warsaw Stock Exchange. Lyxor ETF WIG20 opens a new category of WSE-listed instruments and expands investment possibilities available to market participants.
WSE President Ludwik Sobolewski commented. „We strive to provide investors with the broadest possible range of instruments allowing them to pursue diverse investment strategies. ETFs are a popular and frequently used financial instrument on foreign exchanges.” he said.
Lyxor ETF WIG20 tracks the performance of the WIG20. The instrument allows investors to “purchase” the WSE’s twenty largest and most liquid stocks with one simple order. The experience of foreign markets with ETFs have shown that narrow tracking errors, low costs and the possibility to buy and sell the instruments at any moment during the trading session fuel the interest of retail and institutional investors in Exchange Traded Funds.
The Lyxor ETF on WIG20 is available in the continuous trading system and subject to the same trading rules as equities. The ticker for the instrument is ETFW20L. Two independent market makers are providing liquidity for the instrument: Societe Generale Corporate and Investment Banking and UniCredit Corporate and Investment Banking.
EU Financial supervision package keeps national supervisors in the front line
September 22, 2010--Rules passed today which create three new European Supervisory Authorities (ESAs) and a European Systemic Risk Board (ESRB) keep national regulators at the fore whilst ensuring a common rule book to prevent future economic crises, Kay Swinburne MEP, European Conservatives and Reformists group economics spokesman, said today.
The package's adoption ends 18 months of negotiations that stemmed from the De Larosiere report prepared for the commission in 2009.
The ESAs, which will be up and running by January 2011, have the ability to mediate disputes between national supervisors, to guide national regulators, and to monitor how national authorities implement EU legislation. The ESRB will put in place a common set of indicators to permit fair and open comparisons between cross-border financial institutions and send out appropriate warnings.
Speaking after the vote, Dr Swinburne said:
"This deal ensures that cross-border markets can be supervised by cross-border institutions who coordinate the work of national regulators. It provides the markets with a common rule book and greater certainty over the key questions of who will regulate what and where.
"Instead of handing over the keys to the City of London, this deal places it in a kind of European Neighbourhood Watch programme. Peer oversight will provide us all with loudhailer warnings when there are macro systemic or particular risks.
"This package must be seen as the high-water mark of European financial supervision and not the first step towards handing over these powers to Brussels.
"With this new certainty the financial markets can begin to look to the future."
Financial Supervision Package - Frequently Asked Questions
September 22, 2010--1. Why is reform of financial supervision needed?
Following the onset of the crisis, Commission President Barroso summoned a high level group of experts in financial services in October 2008 to advise on the future of European financial regulation and supervision.
Chaired by Jacques de Larosière, former President of the European Bank for Reconstruction and Development, the group identified some serious shortcomings in the existing system of financial supervision in Europe. There is a Single Market, they said, and financial institutions operate across borders, but supervision remains mostly at national level, uneven and often uncoordinated.
They concluded that a stronger financial sector in the EU in the future needed to have convergence between Member States on technical rules, and a mechanism for ensuring agreement and co-ordination between national supervisors of the same cross-border institution or in colleges of supervisors. A rapid and effective mechanism to ensure consistent application of rules would also be necessary, as well as co-ordinated decision-making in some areas in emergency situations. They concluded the current advisory financial services committees was not sufficiently equipped to carry out these functions.
Based on this report, the European Commission brought forward proposals in September 2009 (see IP/09/1347) On 22 September 2010, the European Parliament – following agreement by all Member States - voted through a new supervisory framework for financial regulation in Europe that will come into force in January 2011.
2. What is the current situation?
There are already three financial services committees at EU level, but in contrast to the new European Supervisory Authorities (ESAs) that will now be established, these committees have advisory powers and can only issue non-binding guidelines and recommendations. National supervisors of cross-border groups must co-operate within colleges of supervisors, but if they cannot agree, there is no mechanism to resolve issues. Many technical rules are determined at Member State level, and there is considerable variation between Member States. Even where rules are harmonised, application can be inconsistent. This fragmented supervision undermines the Single Market, imposes extra costs for financial institutions, and increases the likelihood of failure of financial institutions with potentially additional costs for taxpayers.
September 2010: Flash Consumer Confidence Indicator
September 22, 2010--In September 2010, the DG ECFIN flash estimate of the consumer confidence indicator remained broadly unchanged in the euro area (-11.2 after -11.4 in August) and dropped slightly in the EU (down to -11.8 from -11.2 in August).
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3L3 Committees welcome European Parliament landmark vote to reform
September 22, 2010--The Level 3 Committees, CESR, CEBS and CEIOPS (“the 3L3 Committees”) welcome
today’s landmark decision of the European Parliament to endorse the EU financial supervision reform package.
The political agreement reached over the past weeks between Member States and EU legislators allows Europe to move into a new era of financial supervision. The new
European System of Financial Supervisors (ESFS) integrates the three European Supervisory Authorities (ESAs) and the European Systemic Risk Board (ESRB), establishing the key pillars of a new institutional infrastructure which aims to ensure a
stable, reliable and robust Single Market for financial services.
The European Parliament vote also launches the 3L3 Committees’ institutional transformation. This is a complex process, requiring the existing Committees (CESR, CEBS and CEIOPS) to evolve quickly into European Authorities by January 2011. It will entail significant enhancements to current competencies and the implementation of support structures for the new tasks ahead. This work is now well underway in each of the Committees, in close cooperation with the European Commission.
The 3L3 Committees are more than ever committed to enhance the existing EU financial supervisory architecture. This involves, amongst other things, upgrading the quality and consistency of supervision; reinforcing the oversight of cross-border groups; strengthening risk assessments and stress testing; establishing a single European rule book applicable to all financial institutions in the Single Market, which will lead to a high degree of convergence in the field of supervision; as well as an efficient dialogue with all market participants, investors and consumers of financial services; and a commitment to strengthen cooperation among the three ESAs.
Xetra Offers Liquid Trading of Deutsche Bank AG Subscription Rights
Continuous trading from 22 – 30 September and final auction on 1 October
September 22, 2010-- The subscription rights for the new shares from Deutsche Bank AG’s capital increase have been admitted to trading on the regulated market on the Frankfurt Stock Exchange (FWB) and will be tradable from 22 September until 1 October 2010, inclusive. The subscription rights (ISIN: DE000A1E8H87) will be traded in continuous trading on Xetra until 30 September, and in a final auction on their last trading day, 1 October.
The minimum order size on Xetra is 100 subscription rights. The pan-European network Xetra provides 250 banks and securities trading companies in 19 countries with direct access to trading in subscription rights – in the same infrastructure as they can trade the related underlings and derivatives. On the trading floor of the Frankfurt Stock Exchange the subscription rights are tradable in all order sizes (from one unit upwards) in one auction a day.
With its monitored and regulated infrastructure, Deutsche Börse offers efficient and liquid trading, arbitrage opportunities between the cash and derivative markets, as well as efficient risk management through clearing via the central counterparty.
